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LCD TV Panel Inventory Rises, Prices Drop

Inventory entering into above-normal territory in July and AugustJuly 19, 2013

EL SEGUNDO, CALIF.— —
Global inventory of liquid-crystal display television panels is set to rise to its highest level in 19 months in August, with the elevated stockpiles expected to contribute to a decline in prices in the second half of the year.

Weeks of LCD TV panel inventory held by suppliers are set to increase to 5.0 in August, up from 4.9 in July and 4.8 in June, according to the IHS report “LCD Industry Tracker – TV.” The last time the inventory reached this level was January 2012.

“LCD TV panel inventory is entering into above-normal territory in July and August,” said Ricky Park, senior manager for large-area displays at IHS. “Stockpiles are on the rise because of a delay in economic recovery for many areas of the world, along with growing uncertainty regarding domestic demand in China. The combination of a glut in panels and weak demand will cause price reductions to accelerate in the third quarter compared to the second.”

Average prices are forecast to decline from 3 to 6 percent in the third quarter, compared to a 1 to 2 percent decrease in the second.

TV demand remains weaker than expected in all markets, and panel inventories in China are on the rise due to a mix of industry and government factors.

Chinese TV brands overstocked panels in the first half, and the government in Beijing has terminated its subsidy program for energy-saving TVs, which is expected to dampen demand.
In light of this, Chinese TV manufacturers are cutting panel orders; domestic TV brands account for more than 80 percent of shipments in the world’s largest TV market.
With the exception of February (the Lunar New Year) when they disposed of more panels than they actually purchased, China’s Top six television makers increased their LCD panel purchases significantly every month in 2013 compared to the same periods in 2012. However, they plan to purchase 24 percent fewer panels in July and 25 percent less in August than they did during the same period last year.